by Frank J. Maduri New York (UPI) Oct 25, 2013 The recent acquisition of Smithfield Foods, Inc., by Chinese food producer Shuanghui International has left many Americans feeling concerned about the future of food safety.

These feelings are heightened with the news that tainted dog treats from China have been linked to hundreds of animals dying from a mystery illness.

The purchase of Smithfield was the largest Chinese investment in a U.S. company, with the deal valued at $7 billion, including $4 billion in cash.

Shuanghui will now have access to food science secrets that were proprietary to Smithfield Foods. It can use this technology to directly impact competition with other U.S. food companies.

I spent seven years working in the food technology sector and I can attest that the proprietary technologies held by a respective company provide a strategic advantage over other companies in the industry. The genetics technology held by Smithfield Farms can be used by Shuanghui in China on its pigs, which would dramatically affect the export of U.S. pork to China, potentially decreasing it.

Smithfield officials have maintained that they made this deal to increase the export of U.S. pork to China. The company has been very demonstrative about this operational imperative in order to allay the fears of the American public that Chinese pork would be imported for use in the Smithfield product line.

However, Shuanghui is a huge conglomerate with several subsidiaries and is known throughout the food industry to have very loose management structure. In 2011, a Shuanghui subsidiary was caught putting a banned chemical into pig feed to make the animals leaner. It is this type of blatant sabotage of products and willingness of Chinese companies to cut corners that has U.S. consumers worried that will become the new order of business at Smithfield.

Chinese companies have brought tainted dry wall, pet food and other food products into the United States in recent years. This deal has caused many Americans to question food safety policies especially in companies with foreign ownership.

Many Americans called upon Congress and the Committee on Foreign Investment in the United States to block this purchase of Smithfield Foods. Congress admitted that they couldn’t block the purchase of a U.S. company by a foreign entity unless it involved computers or national security.

Some members of Congress were so concerned about the Smithfield acquisition that they are discussing in the U.S. Senate whether food security could fall within the national security umbrella. If that dialogue has traction and the law is revised, then the Senate could potentially block future purchases by foreign entities.

The CFIUS reviewed and ultimately approved the transaction of Smithfield to Chinese ownership. Its decision raises the question: Is this the start of a trend where more Chinese companies are going to seek to obtain U.S. companies in the food industry?

That trend of Chinese involvement in the U.S. food industry could have drastic implications on food safety. In my experience with the U.S. Food and Drug Administration, I have found that the agency is overrun with responsibilities so it relies on voluntary compliance and not inspections or other methods of enforcing the food safety standards.

The further involvement of Chinese food companies in the U.S. food marketplace also has the American public and the food industry concerned about the integrity of the supply chain. The Chinese reputation for degradation of products and disregard for the regulatory controls in the industry precedes them. The supply chain could very easily be compromised with more Chinese companies being integrated into the U.S. food industry.

Shuanghui maintains that it was interested in obtaining Smithfield Foods to meet increased demand for pork products in China. This increased demand is being driven by their rising middle class coupled with the trend in China to move away from vegetables and rice toward a diet of increased protein consumption.

Furthermore, Shuanghui has stated to the media that it needed to acquire a U.S. company with the technology to help them improve food safety in the pork products marketplace in China. The pork industry in China has had a number of very notable safety issues, including an incident in which dead pigs were dumped into a river near Shanghai.

Food technology and safety protocols used by Smithfield are going to be integral for Shuanghui to expand its capability to meet the rising demand for pork in China.

In the end, this deal could portend a future where China is forced to obtain other food companies in the United States and throughout the Western world because of the poor environmental conditions in China.

These conditions, along with the tremendous demand of an enormous population, will be the impetus for China to seek outside help via the purchase of Western companies. This trend will probably alienate China on the international stage but the Chinese don’t have many other constructive pathways to address the issues in food safety that have plagued their country.

The U.S. public has to have a constructive dialogue and determine how we can implement government safeguards to insulate the U.S. food industry from involvement from Chinese investment and ownership in the future.

Brazil and New Zealand have safeguarded their agricultural systems from Chinese intervention and the United States has to consider similar safeguards. Our society and the future generations of Americans depend upon it.

(Frank J. Maduri is a freelance writer and journalist with professional experience across a variety of industries including food technology, pharmaceuticals, healthcare services and environmental products. He has been involved in several large scale business transactions involving commodities sourced throughout the world.)

(United Press International’s „Outside View“ commentaries are written by outside contributors who specialize in a variety of important issues. The views expressed do not necessarily reflect those of United Press International. In the interests of creating an open forum, original submissions are invited.)

When the Chinese company Shuanghui International bought US pork giant Smithfield in May—a deal that’s still on hold pending US government review—I read it as another sign that China’s rulers are ready to more or less outsource the nation’s food supply as it emerges as the globe’s manufacturing powerhouse.

Since then, two more data points have crossed my desk. The most recent involves this blockbuster Bloomberg piece on China’s emerging coal/water dilemma. The nation’s manufacturing miracle has been largely powered by coal, source of 70 percent of its total energy consumption. And it intends to ramp up its coal-fired electricity massively—by 2020, Bloomberg notes, the Chinese government „plans to boost coal-fired power by twice the total [power] generating capacity of India.“..

JIAXING, China (Reuters) – Overcrowding on farms around Shanghai was the underlying factor that led to 16,000 dead pigs floating down the Huangpu river into China’s affluent financial centre, according to an analysis of official documents and interviews with farmers in the region.

The appearance last month of carcasses of rotting hogs in a river that supplies tap water to the eastern Chinese city was a morbid reminder of the pressures facing China’s mostly small-scale farmers as the country grapples with food safety scares, environmental pressures and, most recently, a bird flu outbreak.

Until now the main reason for Shanghai’s startling outbreak of dead hogs appeared to have been a local government crackdown on criminal gangs that had been selling abandoned carcasses as meat on the black market, meaning fewer ended up in the river.

But a deeper look suggests that an unsustainable level of overcrowding — a key factor in the spread of disease and death rates — was the critical issue. Experts warn that if conditions are not improved the incident may not have been a one-off.

„We can’t let things go on the way they are or it won’t just be the 10,000 or so pigs in the river this year, we’ll see more in the coming years,“ said Xu Yafeng, CEO of NX28, a specialist web platform for agricultural information.

In an acknowledgement of the problem, officials launched a plan late last year to slash the number of pigs in the region — a drive that may have made things worse in the short-term by cutting the amount of land available for farming before there was a corresponding reduction in livestock.

The number of pigs in Jiaxing, a city just to the west of Shanghai identified as the main source of the dead pigs, more than doubled over the last two decades. It hit 7.5 million in 2012, even as the local government cut the amount of land available for farmers.

This overcrowding of pigs led to the city-wide plan to cut hog numbers to below 2 million within just two years.

“ the winter to this spring, the trend of dead pigs has been particularly serious,“ Wang Xianjun, a local environmental official, told the Jiaxing Daily in March.

„We keep digging more pits to deal with the dead pigs, but if it carries on like this, they won’t be able to take them.“

Wang’s words proved prophetic. Just four days later, the first reports emerged of pigs drifting down the Huangpu.

China’s booming demand for meat has the potential to create ever more crowded farms, ripe for the spread of disease. Pork demand is expected to grow around 20 percent from 2012 levels to 60 million tons by 2020, according to a recent Rabobank report.

The number of small hog farmers around Jiaxing climbed over the last few years as pork prices surged, resulting in far too many pigs for the land available.

Data from a Nanhu district government document in September shows in 2011 the key hog farming town of Xinfeng had a level of 15.3 pigs per mu (667 sq meters), three times higher than the level of five hogs per mu local officials recommended in August 2012. The nearby village of Fengqiao had levels of 10 hog per mu.

„Disease and mortality rates among the pigs have got worse every year,“ said one woman in the farming area of Henggang on the outskirts of Jiaxing. „In some areas this year mortality rates were probably as high as 30 percent.“

The normal mortality rate for pigs in China is around 3 to 5 percent, Fang Yan, the deputy head of the rural department of China’s state planning bureau, told a news conference in Beijing.

The high density of pig farms, and the poor farm management that is often associated with small-scale farming operations, are key risk factors for porcine circovirus — a common disease among pigs that is the most likely killer of the floating hogs — according to many academic and scientific papers.

Since 2012, however, oversupply has driven pork prices down sharply. Between the end of January and mid-March this year, prices tumbled 16.2 percent.

This had a further impact on disease and mortality rates –when prices are weak, farmers tend to take less care of their livestock, said Tao Shi, a Shanghai-based expert on hog farming.

Increasingly aware of the urgency of the issue, the Jiaxing government launched its plan last September to reduce the number of hogs by two-thirds and to slash the amount of land available for farming by around 40 percent.

Since the carcasses were discovered in the Huangpu, the response has accelerated. A visit to several farming districts around Jiaxing revealed empty sties, which locals said had been recently vacated for demolition.

Three local women in Henggang told Reuters that pig farmers were being given financial incentives to abandon the land, while one official sign, recently painted on the wall of a nearby factory, read: „Destroy the pig pens, lead a happy life.“

Many farmers are not happy. One 40-year-old said he has been ordered to close down his farm, while another farmer Reuters interviewed was in the middle of selling his pigs at a loss of 150 yuan ($24) per head after being told his farm contravened the regulations. Neither wanted their names used.

„They can’t just do it this way and wipe us out so fast,“ the farmer said, as all but one of his pigs were taken away in two crowded trucks over the space of 30 minutes.

The surge of dead pigs demonstrates the wider pressures China’s farmers now confront. Limited land access, falling pork prices, tighter profit margins and the rapid spread of urbanization forces some farmers off the land entirely. Others are pushed to farm in ever more crowded conditions.

Many Chinese pig farmers use medicated feed containing antibiotics to help stave off disease, but cost pressures have led some to cut back on expensive vaccines in favor of giving medication later when illness strikes. Others skirt incineration costs by dumping livestock.

David Mahon, Beijing-based managing director of Mahon China Investment Management said the pressure on farmers‘ margins was huge, which could lead to some farmers cutting corners.

A drug used to keep pigs lean and boost their growth is jeopardizing the nation’s exports of what once was known as „the other white meat.“

The drug, ractopamine hydrochloride, is fed to pigs and other animals right up until slaughter and minute traces have been found in meat. The European Union, China, Taiwan and many others have banned its use, citing concerns about its effect on human health, limiting U.S. meat exports to key markets.

Although few Americans outside of the livestock industry have ever heard of ractopamine, the feed additive is controversial. Fed to an estimated 60 to 80 percent of pigs in the United States, it has sickened or killed more of them than any other livestock drug on the market, an investigation of Food and Drug Administration records shows. Cattle and turkeys have also suffered high numbers of illnesses from the drug.

Growing concern over sick animals in the nation’s food supply sparked a California law banning the sale and slaughter of livestock unable to walk, but that law was struck down by the Supreme Court Monday. Meat producers had sued to overturn California’s ban, arguing that the state could not supercede federal rules on meat production. The court agreed.

The FDA, which regulates livestock drugs in the United States, deemed ractopamine safe 13 years ago and approved it, setting a level of acceptable residues in meat. Canada and 24 other countries approved the drug as well.

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